COPF greenlights tax breaks for India’s HCL technologies, subject to Treasury justification

By Yohan Perera and Ajith Siriwardana

Sri Lanka should follow the Indian tax system when it comes to granting tax breaks to foreign investors, main opponent Samagi Jana Balawegaya (SJB) suggested yesterday.

During the parliamentary debate on granting India’s HCL Technologies Ltd a 17-year tax holiday, SJB MP Kabir Hashim said Sri Lanka should follow the Indian system rather than give a company long tax holidays.

“India only grants foreign companies tax breaks if they locate their businesses in special economic zones. In India, there are only five-year tax exemptions. Accordingly, the Indian government levies a 50 percent profit tax after the five-year tax exemption expires. Sri Lanka should also follow this system,” he said.

“We accept that HCL Technologies is one of the largest IT companies in India and that it will invest US$10 million and pay monthly salaries of Rs. 500,000 for some of its employees and will increase it (salaries) to Rs. 1 million in the future. We also understand the fact that the company will provide employment to 5,380 people in Sri Lankans by 2032,” he added.

Meanwhile, it was reported that the Public Finance Committee (COPF) had agreed to give the go-ahead for tax breaks to be granted to HCL Technologies Ltd. to give provided that the Ministry of Finance justifies the decision to grant a long tax holiday under the Strategic Development Act.